Starting from where we left off, on September 10, we had said,
“Nifty is in the process of tracing a leg of impulse wave 5
of C of diametric D, which had started from December 20, 2011.
As per Neo Wave, leg b has great probability of touching 2-4
trend line in the coming days. There could even be a break of the trend line. Assuming
the same angle of ascension, between lowest point of 2 and top of 3,we look at
a probability of c ( and therefore the top of 5) at around 5525.Since the first
leg of retracement should take the same time or similar time as taken by Nifty
to move from 4 to 5, we have the retracement line as shown, returning to
5217...
If wave b deepens, then the classic 2-4 trend line may come
into play...
All look as interesting possibilities. Looks like the Fed
announcement of September 12 may cause initial euphoria followed by a reality
check... “
Here is what actually happened…
·
Global markets rallied after the Fed said
Thursday, September 13, 2012, it would start a third programme to purchase
$40-billion per month in mortgage-backed bonds—known more commonly as
quantitative easing (QE3).
The US central bank added that it would continue with the
scheme until it saw substantial improvement in the jobs market. It also pledged
to keep benchmark interest rates at ultra-low levels until at least mid-2015.
The news sent the euro soaring above $1.31 to a new
four-month high. The weaker greenback boosts dollar-priced commodities, which
become cheaper for buyers using stronger currencies, tending to stimulate
demand.
Analysts said dollar was being hit by the prospect of higher
US inflation caused by the stimulus. The euro also won a boost this week from
German court approval for a new 500-billion-euro (645-billion-dollar) firewall
and fiscal pact, clearing a key hurdle in solving the Eurozone debt crisis.
·
Government of India, on September 13, 2012,
raised the diesel price by a steep Rs 5 per litre and capped the number of subsidized
cooking gas cylinder to six per household a year, decisions that will rake in
an additional Rs 20,300 crore to the oil companies
·
Stepping up on the reforms front, the
government, on Friday, has approved Foreign Direct Investment in aviation and multi brand retail.
·
The government has allowed foreign airlines to
buy into Indian carriers. The move will now allow foreign airliners to buy as
much as 49% of the local carries and pump in funds.
·
FDI in multi-brand retail: Almost as a challenge
to opposition parties and allies who are opposed to the move, the government
has also approved upto 51% FDI in multi brand retail.
·
In a major decision to liberalize the broadcast
sector, the government today ( September
16, 2012) decided to raise FDI cap to 74 per cent in various services of the
sector, except the TV news channels and FM radio where the cap of 26 per cent
will apply.
.Opening the week at 5361.90, Nifty zoomed to end at 5577.65
on Friday, September 14, 2012.
Have a look at the volume changes!
Let us get to our analysis and expectation of what next…
Since the prime mover had
been the FOMC Decision, we start from the US.
Let us look at this QE programs from an astro point of view
first.
So planetary signatures were signifying progressively weaker
results for the QE series. In addition with a potential, bitterly fought and
close election on the cards for the US (Elections will take place when both Jupiter
and Mercury will be retrograde.)Moreover, in January 2013, the new US President
will be forced to address the issues of expiring temporary tax cuts. Deep,
across the board spending cuts to reign in the ballooning fiscal deficits will
kick in automatically.
With Mercury, Sun and Venus poised to engage Uranus and
Pluto in their square formation, this
euphoria could come down much sooner than expected.
Let
us look at our own charts, closer to home
We have here the natal chart of India on its verge of Independence
and the transit chart of September 14, 2012.The current dasa situation is also
shown.
Amazingly we find Jupiter has moved to the Lagna position
here also. See the arrow marked “a “.India is currently going through Sun Dasa,
Saturn Bhukthi and Ketu Antara. India`s Lagna lord is Venus. And Mercury is the lord
of 2 and 5, houses of income sources and stock markets. The decisions for
accelerating reforms were announced when Sun was in the fourth. In Leo. Soon
Sun will move to Virgo and then to Libra, which is a debilitation house for
Sun. Venus also is moving towards Virgo, where it gets debilitated. The
Government has got this boost of energy possibly because Mars has moved into
the sixth house and is becoming conjunct with Natal Jupiter. Antara lord Ketu
is moving in its debilitation in the 12th.Saturn, the Bhukthi lord
is in trine with Neptune, the lord of deception and unreasonable hope.
So apart from the jargon, what do we understand? When Mars
moves into its own house Scorpio, the opposition gains strength. When Mars
conjuncts Rahu, issues may reach a crescendo. Will the Govt fall? Not likely,
because the Bhukthi lord Saturn is gaining strength of exaltation. Also Mercury
is in Virgo, moving towards its degree of exaltation.
So the euphoric rise could
start tempering with a good correction following .But since the following
antaras Venus and Sun are good for India, the medium
term outlook for our economy and markets, is positive.
Looking at the Technicals,
Wave 5 has exhibited more power than we anticipated. It had
crossed the 1-3 trend line with good volume. This does not mean the terminal impulse
has to be immediate discarded. It has retraced more than 76.8% of wave 3 (depicted
as AB) and is well on its way to touch 5629, which represents a major
resistance. In fact 5634 represents the point beyond which we have to re-look at
the wave counts.
Our expectation is that we may soon have a top which could
be a leg of wave 5 and then have a pull back to b leg. As can be seen in the
chart, we will also be entering into the reversal time zone from Monday
onwards.
In short
A.
we may see a top, a correction and another rise
to form a final culmination. If this culmination is beyond 5634, then the
ensuing correction will end in the 5200 range. If so this will be a nice point
to enter the market for an investment time period of up to January 2013.
B.
If the final top of 5 wave ends before 5634,
then the correction will be fast and furious and will go back to 4700 levels.
It would be a good idea to take profits within the next two
days and then wait for a price confirmation for the corrections.
Here is a corresponding graph for BSE Sensex.
As usual please wait for price confirmation before taking
any position commitments. In these columns I had indicated that the volatility will
soon increase. It now has. Going forward it will increase even more with two way
movements. It is absolutely essential that stop losses are employed regularly.
Have a great week of trading!
